EUR/GBP trading within a familiar range

EUR/GBP saw some upward movement on Wednesday but failed to sustain momentum.
UK inflation data showed a slight increase in February but failed to impact the market significantly.
Traders await the Bank of England (BoE) meeting on Thursday for clearer direction.
After UK consumer inflation figures were released, EUR/GBP saw a slight uptick to around 0.8555-0.8560. However, the currency pair remained within the range it has held since the start of the month.

The Office for National Statistics (ONS) reported that UK headline CPI increased by 0.6% in February, slightly higher than the previous month’s decrease of 0.6% but in line with consensus estimates. However, the yearly rate dropped from 4.0% in January to 3.4% in February, the lowest since September 2021.

Core CPI also fell from 5.1% YoY to 4.5% in February, missing expectations. These figures, coupled with the technical recession in the UK in the fourth quarter, have raised speculation about an early rate cut by the Bank of England (BoE). This sentiment has weakened the British Pound (GBP) and provided some support to EUR/GBP.

Despite the higher inflation, the UK’s figures remain well above the BoE’s 2.0% target, which has helped limit GBP losses. However, the Euro (EUR) remains under pressure amid expectations that the European Central Bank (ECB) may begin cutting interest rates in June. This dynamic has also capped gains for EUR/GBP.

Traders are cautious and prefer to wait for clearer signals from the BoE’s policy meeting on Thursday before making significant moves. It’s advisable to watch for a sustained breakout from the current trading range before considering further market positions.

EUR/GBP